Thursday, September 22, 2011

European shares slump on Fed's grim growth outlook

LONDON: European shares fell sharply on Thursday after the U.S. Federal Reserve's warning of significant risks to the already struggling economy and on data showing a further contraction in China's manufacturing sector.

At 0706 GMT, the FTSEurofirst 300 index of top European shares was down 2.5 percent at 895.32 points after sliding 1.7 percent in the previous session. The index is down 20 percent this year on euro zone debt concerns and worries about global economic growth.

"Apart from the political uncertainty, we have got a major macroeconomic slowdown and that is putting a lot of pressure on the markets. China has been one of those regions where growth was still fairly strong. Now if we were to see a problem, that would not be good for global equities," Klaus Wiener, chief economist at Generali Investments, said.

"But I would be surprised to see markets moving into a panic mode as fundamentally the situation is, by no means, comparable to what we had in 2008. There is some strain on the interbank market, but credit availability is still there and that should help."

Miners came under severe pressure, with key base metals prices falling 1.4 to 3.4 percent on worries about demand for industrial metals. The European mining sector index fell 4.8 percent. ' Reuters


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